Correlation Between Bank of America and VanEck China
Can any of the company-specific risk be diversified away by investing in both Bank of America and VanEck China at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and VanEck China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and VanEck China Bond, you can compare the effects of market volatilities on Bank of America and VanEck China and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of VanEck China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and VanEck China.
Diversification Opportunities for Bank of America and VanEck China
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and VanEck is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of Bank of America i.e., Bank of America and VanEck China go up and down completely randomly.
Pair Corralation between Bank of America and VanEck China
Considering the 90-day investment horizon Bank of America is expected to generate 5.07 times more return on investment than VanEck China. However, Bank of America is 5.07 times more volatile than VanEck China Bond. It trades about 0.31 of its potential returns per unit of risk. VanEck China Bond is currently generating about -0.14 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. VanEck China Bond
Performance |
| Timeline |
| Bank of America |
| VanEck China Bond |
Bank of America and VanEck China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and VanEck China
The main advantage of trading using opposite Bank of America and VanEck China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, VanEck China can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VanEck China will offset losses from the drop in VanEck China's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| VanEck China vs. Xtrackers California Municipal | VanEck China vs. IQ MacKay Municipal | VanEck China vs. IQ MacKay Municipal | VanEck China vs. ALPS Intermediate Municipal |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |